Goldtrail Travel v Aydin & Ors (2017)

Summary

The Supreme Court set out the factors to be considered when determining whether a company's appeal would be stifled by its inability to comply with a condition to pay a sum into court. The making of such an order for a company without assets could not be justified by reliance on the fact that the company's owner could potentially make the payment, without considering whether he would actually do so.

Facts

The appellant appealed against the imposition of a condition on its appeal against a judgment, and the refusal to discharge that condition.

The respondent had obtained judgment against the appellant for £3.64 million plus interest. The appellant obtained permission to appeal. However, after an application by the respondent, a judge made the appeal conditional on the appellant paying the judgment sum into court by a specified date. The appellant failed to comply, and the respondent sought to have the appeal dismissed. The appellant cross-applied for the condition to be discharged, as it could not comply and its appeal would be stifled. The judge took into account the financial relationship between the appellant and its wealthy owner and refused to discharge the condition. The judge concluded that the owner had decided not to fund the payment into court. The appellant's appeal was dismissed for non-compliance with the condition.

Held

(Lords Clarke and Carnwath dissenting) (1) The following principles applied:

(a) if an appellant had permission to bring an appeal, it was wrong to impose a condition which had the effect of preventing him from bringing it or continuing it. The application of ECHR art.6 yielded the same conclusion;

(b) if a proposed condition was otherwise appropriate, the contention that it would stifle the appeal needed to be established by the appellant on the balance of probabilities. If the contention was established, the condition should not be imposed;

(c) where an appellant appeared to have no realisable assets of its own, a condition for payment would not stifle its appeal if it could raise the required sum. However, when the respondent suggested that the appellant raise money from its controlling shareholder, the court needed to be cautious. The shareholder's distinct legal personality had to remain at the forefront of the analysis. The question should always be whether the company could raise the money, not whether the shareholder could raise the money;

(d) In Hammond Suddards Solicitors v Agrichem International Holdings Ltd [2001] EWCA Civ 2065, [2002] C.P. Rep. 21 the court had observed that there was no evidence that the appellant's wealthy owners could not pay the judgment debt. It had also observed that there was nothing unjust in providing the appellant's owner with a choice, and "if it was in the interests of the appellant for the appeal to continue, the [owner] must procure payment of the current orders". It was wrong for the court to express its reasoning in terms of whether the owners could themselves make payment, Hammond disapproved. That misconception had been developed in Societe Generale SA v Saad Trading, Contracting and Financial Services Co [2012] EWCA Civ 695 into the principle that in exceptional circumstances an order for a party, without apparent assets of its own, to make a payment into court could be justified by whether another person probably could advance the necessary funds, irrespective of whether he probably would do so, Societe Generale disapproved;

(e) the correct criterion was whether the appellant company had established on the balance of probabilities that no such funds would be made available to it, whether by its owner or by some other closely associated person, as would enable it to satisfy the requested condition;

(f) where a company and its owner refuted that funds could be made available, the court should not take the refutation at face value. It should judge the probable availability of the funds by reference to the underlying realities of the company's financial position; and by reference to all aspects of its relationship with its owner, including the extent to which he was directing its affairs and had supported it in financial terms (see paras 12, 15-18, 22-25 of judgment).

(2) The judge's conclusion that the appellant's owner had decided not to fund the payment meant that he had not applied the correct criterion. He had concluded that the circumstances were exceptional. In other words, he was proceeding on the misconception in the Hammond and Societe Generale cases. The appellant's application to discharge the condition was therefore remitted for determination by reference to the correct criterion (paras 25-26).

(3) (Per Lords Clarke and Carnwath) The basic principle was stated in MV Yorke Motors v Edwards [1982] 1 W.L.R. 444, and the burden was on the person or entity concerned to show that he could not find relevant capital to support him, MV Yorke considered. The judge had not materially misstated the relevant principles or arrived at the wrong conclusion. It was also important to put his decision into context. At no stage in the earlier hearings had the appellant contended that payment of the judgment sum would stifle the appeal. The question was whether the appellant either had the resources, or access to resources, to pay £3.64 million. There was no direct evidence from the appellant's owner on the point. The evidence fell far short of establishing that the condition would in fact stifle the appeal (paras 27, 38-41, 48-49).